Regional regulation undermines shipping’s path to decarbonisation

One of the chief concerns among panellists at an owner and operators’ session during the conference is a patchwork of regional regulations that will undermine international shipping’s path to decarbonisation and penalise local and domestic shipowners.

When it comes to localised environmental and emissions regulations, panellists Clean Shipping Alliance executive director Ian Adams, Delta Corp Shipping senior vice president, ship management Caroline Huot, DFDS senior advisor, climate and environment Poul Woodall and Solvang fleet director Tor Øyvind Ask were in full agreement.

“There must be a level playing field, otherwise unfair competition shall prevail from still unregulated areas,” said Ms Huot. Mr Adams added, “We must all work together through IMO.”

One of those efforts through IMO is the establishment of a US$5Bn global fund to accelerate the research and development of zero-carbon technologies, to be co-ordinated by an International Maritime Research and Development Board.

Put forth by the International Chamber of Shipping (ICS) in December 2019, the fund is intended to enable the shipping industry to decarbonise completely, in line with the ambitious CO₂ reduction targets agreed by IMO. Financing for the fund is secured by the industry itself via a mandatory contribution per tonne of bunker fuel purchased for consumption.

However, this effort at IMO could be undermined by the European Union’s recent unilateral proposal to extend its Emissions Trading System (ETS) to international shipping, including non-EU ships that call in the EU, with the intention of raising billions of euros to support the EU’s post-Covid-19 recovery, said ICS.

In its annual report, the ICS noted the EU’s trading partners, such as China and the United States, “will no doubt view this unwelcome initiative as an extraterritorial ‘tax’ on trade.”

Discussing the need for “international regulation for an international industry,” Mr Adams acknowledged that the EU, as first movers on sulphur legislation many years ago, had managed to keep its policy aligned with the discussions ongoing within IMO at the time. Mr Adams cautioned that the EU would again need to ensure its policies were aligned with IMO to avoid creating a patchwork of regional emissions regulations around the globe.

Growing ban on open-loop scrubbers

During his presentation, Mr Adams noted another growing regional trend – the ban on open-loop scrubber use at ports around the world – and pushed back against ports that have enacted them.

“Those bans are not based on any sort of science or fact,” he said, but rather politics or emotion. Describing what he saw as the thought process behind the bans – “There must be harm being done because someone is putting something into the water,” he paraphrased – Mr Adams called the practice unfair.

Members of Mr Adams’ organisation, the Clean Shipping Alliance – representing dry bulk, tanker, container, roro, heavy-lift, ferry and cruise ship owners with a total of about 3,000 vessels – have accumulated extensive experience in using scrubbers to comply with Marpol Annex VI.

Mr Adams said the use of scrubbers has been “relatively straightforward,” pointing to several studies showing that the discharge of water from an EGCS has no detectable impact on seawater.

When using scrubbers, shipowners can use their monitoring equipment to show compliance with emissions regulations to port state control authorities. In the case where a port has banned the use of open-loop scrubbers, shipowners with EGCS systems installed on board must show a record of the switchover at the appropriate time to compliant fuel.

In discussing compliant fuel, Mr Adams noted that during the run up to the implementation of the IMO global 0.50% sulphur cap, there was speculation about the density, viscosity, flashpoint and compatibility of the new compliant fuels. One of the most perplexing claims was the promise that these compliant fuels would be compatible around the world.

“Frankly, I found that a bit mystifying because the one thing we have always had with marine fuels is the knowledge that they are generally incompatible with different suppliers,” he said.

This has led to the practice of avoiding the blending of fuels from different suppliers. With fewer compatibility issues this year than prior to the enactment of the sulphur limit, Mr Adams chalked the difference up to experience.

“This is because we have gotten better at handling the changeover procedures,” he said.

That does not mean the switch to very low sulphur fuel oil (VLSFO) has been without headaches. Although issues with the new VLSFO have been less than expected, main engine lubrication problems have been occurring quite frequently, causing deposits on the top of the engine and liner wear, pointed out Ms Huot. “It has been a reminder that the intimate link between fuels in use and cylinder oils in service requires more focus on board, careful trend monitoring and quality products,” she said.

Less clear cut is how shipowners using only compliant fuel are being asked to show compliance. While a bunker delivery note should suffice, some port state control authorities have decided to test the actual fuel being used at the time. This has led to samples being taken from the ship for testing, the panel noted.